Raghuram Rajan might be feeling like it’s Jackson Hole 2005 all over again: He’s making an argument and the central banking community just isn’t buying it.

A decade ago Mr. Rajan correctly argued at the Federal Reserve’s annual Wyoming retreat that the financial system was becoming vulnerable to a shock. Central bankers and academics in the audience largely dismissed his argument.

Now governor of the Reserve Bank of India, Mr. Rajan is pressing forward with a different problem in mind. He argued in Washington Thursday for more monetary policy coordination among central banks. Without coordination, he said, central banks have moved toward ever-easier monetary policies which will destabilize the financial system yet again. The volatility that comes with uncoordinated fluctuations in monetary policy is especially hard on emerging market economies such as India’s, he said.

“The current non-system in international monetary policy is, in my view, a source of substantial risk, both to sustainable growth as well as to the financial sector,” he said in a talk at the Brookings Institution. “It is not an industrial country problem, nor an emerging market problem. It is a problem of collective action. We are being pushed towards competitive monetary easing.”

Yet the backdrop to Mr. Rajan’s argument doesn’t look as threatening today as it did six months ago when he started making it. The Fed has been pulling back from its easing all year as it slowly unwinds a bond-buying program. Mr. Rajan worries about the global spillovers from the end of easy money, but India’s markets don’t seem to be suffering too greatly. The Sensex index is up 7.5% this year and 22.5% from a year ago, making it one of the better performing stock markets in the world. The rupee has strengthened against the dollar since September.

“A lot of what you’ve been talking about today just reflects the fact that you are very skeptical about unconventional monetary policies,” former Fed chairman Ben Bernanke responded from the front row of the audience at the Hutchins Center on Fiscal and Monetary Policy. Mr. Bernanke said the Fed’s policies have worked and that their negative effects on developing economies were being overstated. It is up to central banks to look after their own domestic economies, not the world, he has argued.

Central bankers from some developing markets took Mr. Bernanke’s side.

“I am a bit skeptical about the capacity of jurisdictions to effectively and fully coordinate policies,” Alexandre Tombini, president of the Central Bank of Brazil, said in an interview with the Wall Street Journal. Mr. Tombini said central bankers already do plenty of talking at meetings of the Bank for International Settlements, the Group of 20 advanced and developing economies, the Financial Stability Board, and other venues.

It was Brazil’s responsibility to take care of its own business, he said.

“Brazil has a long history of riding global financial cycles,” he said. “Of course we think there are spillovers from monetary policy in advanced economies. The world is a very financially integrated place. But we have learned how to ride this.”

Mr. Rajan lost his argument with the world’s central banking elite in 2005, but proved to be right in the long run. It looks like he’s losing this argument, too. But just because he was right then doesn’t mean he’s right again.

-By Jon Hilsenrath

MORNING MINUTES: KEY DEVELOPMENTS AROUND THE WORLD

India’s Rajan Criticizes Fed Officials Over Turmoil in Emerging Markets. India’s central bank chief Thursday criticized U.S. Federal Reserve officials for not expressing more concern about the financial turmoil their low-interest rate policies have unleashed in emerging market economies. Raghuram Rajan criticized the Fed for failing to include in its January policy statement any mention of the volatility in emerging markets at the time. http://on.wsj.com/1kNS39V

Bernanke Settles Back Into Research World. Wearing a white button-down shirt—no tie— and sounding much feistier than he did as Federal Reserve Chairman, Mr. Bernanke took issue with India central bank chief Raghuram Rajan’s suggestion that U.S. central bank officials should pay greater attention to the effects of their policies on overseas economies. “A lot of what you’ve been talking about today just reflects the fact that you are very skeptical about unconventional monetary policies,” Mr. Bernanke said from the front row of the audience during the question-and-answer session of a panel discussion at the Hutchins Center on Fiscal and Monetary Policy. http://on.wsj.com/1n99Iua

China Prepares its Public for Slower Growth in 2014. China’s top economic leader appeared to prepare the public for a new low in China’s growth, as an unexpected drop in exports underlined how leaders face an increasingly difficult trade-off between stimulating the economy and sticking to their reform agenda. Premier Li Keqiang offered the strongest and most public signal yet that Chinese leaders are paving the way for growth slower than the official target of 7.5%. He told global leaders and delegates at the Boao Forum for Asia that growth could be a bit higher or lower than the target, giving Beijing wiggle room to miss it for the first time in a decade and a half. http://on.wsj.com/OJDtpf

China Ready to Boost Economy. China’s central bank chief Zhou Xiaochuan said Friday that the People’s Bank of China could use a range of measures to aid the economy if growth strays too far from the government’s targeted range. http://on.wsj.com/PWPU2k

PBOC’s Chief: Mutual Market Would Bolster Cross-Border Yuan Use. China central bank Gov. Zhou Xiaochuan said Thursday a new trial program that would allow cross-border stock investment between Hong Kong and China would help bolster use of the yuan outside the mainland. Speaking at the Boao Forum for Asia, Mr. Zhou said regulators would allow investors to use the currency of their choice if they participate. http://on.wsj.com/OIRmnK

PBOC Deposit Insurance is Coming to China This Year, Probably. The Chinese government plans to implement a deposit-insurance system for bank accounts this year, a top official from China’s central bank said Thursday, said Yi Gang, vice governor of the People’s Bank of China, speaking on a panel in Washington. “That is also very important infrastructure for continued liberalization in interest rates.” Separately, Mr. Yo said the recent depreciation in China’s currency is normal and the country remains on track to let markets play a larger role in determining its value. http://on.wsj.com/1kNTSUm

Draghi SaysECB Open to Additional Monetary Stimulus if Needed. The European Central Bank is keeping a close watch on inflation and is open to taking additional stimulus measures to keep it from staying too low for too long, ECB President Mario Draghi said Thursday. “The ECB is resolute in its determination to maintain a high degree of monetary accommodation and to act swiftly if required,” Mr. Draghi said in prepared comments to the International Monetary and Financial Committee, echoing comments he made following the ECB’s monthly meeting last week. http://on.wsj.com/1n9qh9j

ECB’s Constancio: “We Will Do Something” About Low Inflation. The ECB is poised to take action to tackle the problem of low inflation that continues to consistently undershoot its official target, ECB Vice President Vitor Constancio said Thursday. He said policy makers are still trying to figure out which measures to take, adding that bond buying is a possibility. “We will do something because the situation is that inflation is indeed very low, and even considering only our primary mandate of price stability we are clearly not achieving our target of having, on a medium-term basis, inflation below but close to 2%,” Mr. Constancio told a conference in Washington sponsored by the Levy Economics Institute. http://on.wsj.com/1n92J4qECB Constancio Says Healthy Bank Sector Won’t Guarantee Quick Economic Rebound.http://on.wsj.com/1sHfLdz

ECB’s Praet: Euro-Zone Economies ‘Will See Economic Slack Until 2017.’ The euro zone economy will see economic slack persist until 2017 at least, European Central Bank executive board member Peter Praet said Thursday, suggesting that the ECB will maintain its easy-money policies well into the future. Still, Mr. Praet signaled that the ECB is in no rush to provide additional stimulus through rate cuts or other measures, saying that the bank’s inflation outlook remains in place despite a string of weak reports. http://on.wsj.com/1ixBFaW

Brazil’s Tombini: A Pause in Rate Hikes is Possible. The Central Bank of Brazil could pause its year-long campaign of interest rate increases in the months ahead, despite a recent uptick in food prices, Alexandre Tombini, president of the central bank said in an interview with the Wall Street Journal on the sidelines of International Monetary Fund meetings in Washington. http://on.wsj.com/1k9H0cO

Tombini: Brazil Well-Prepared for QE Pullback. Brazil has built up enough domestic buffers against rapid shifts in capital flows to allow it to withstand a pullback from unconventional interest rate policy in the world’s largest economies, Mr. Tombini said Thursday. http://on.wsj.com/1k9xLcq

Brazil Interbank Rates Drop as Central Bank Signals End to Rate Boosts. Interbank interest rates in Brazil declined on Thursday after the Central Bank of Brazil gave its clearest signal so far that it may soon stop raising interest rates despite a recent surge in food prices. http://on.wsj.com/1i5nSMk

BOJ Minutes Show Caution Among Some Board Members. In a sign that not every Bank of Japan policy maker is as upbeat as Gov. Haruhiko Kuroda about growth prospects, some of the central bank’s board members voiced concerns at last month’s meeting over two increasingly crucial parts of the economy: exports and capital investment. Dow Jones Newswires

BOE and ECB Seek to Revive ABS Market. Europe’s top two central banks are joining forces to push for the relaxation of rules on an asset class blamed for the global financial crisis, as they attempt to unclog credit flows in the region. http://on.ft.com/1iCODWa

Singapore Monetary Authority ‘Ready to Assist’ Currency-Market Probe. The Monetary Authority of Singapore said Thursday it “stands ready to assist” with a global probe into currency markets, following a Wall Street Journal article that said Deutsche Bank AG found a top foreign-exchange saleswoman had allegedly communicated inappropriately with the Singaporean central bank. http://on.wsj.com/OIK57t

Russian Bank CEO: BOE ‘Politically Motivated” in Tougher Regulations. The head of Russian state-controlled lender VTB Bank on Thursday accused the Bank of England of being “politically motivated” in imposing tougher regulatory requirements on the bank’s U.K. unit. Andrei Kostin said at a press conference that the measures taken by the BOE, including demands for higher reserves and additional stress testing, have prevented the unit from operating normally and the bank may have to consider shutting down its operation in the country. http://on.wsj.com/1i5oAZW

The fewest number of Americans filed last week for unemployment benefits since before the recession, a sign of the continued improvement in the U.S. labor markets. Jobless claims declined by 32,000 to 300,000 for the week ended April 5, the lowest number since May 2007. http://on.wsj.com/1kNWPEm

Ryan Olson, a research assistant at the Heritage Foundation, writes on the conservative Washington think tank’s blog that more central bank independence is needed. “With the Federal Reserve continuing its taper, world monetary policy is sailing into uncharted waters. Policymakers gathered in Washington this week should take note.” http://blog.heritage.org/2014/04/10/fed-tapers-central-bank-independence-needed/

Raphael Auer, an economist at the Swiss National Bank and a fellow of Princeton University, argues that improvements in current accounts in Greece, Italy, Portugal and Spain reflect a fundamental improvement in competitiveness, rather than a temporary suppression of demand for imports. http://www.voxeu.org/article/increasing-competiveness-southern-eurozone

A new paper from three Fed economists argues that U.S. banks with foreign affiliates sometimes behave very different from those institutions that operate purely domestically. “During more extreme liquidity risk conditions and when banks access official liquidity facilities, different characteristics of banks matter for cross-sectional lending variation. During these periods, banks with higher Tier 1 capital have higher growth rates in domestic lending and credit and rely relatively less on borrowing from their affiliates. During these times and with official liquidity use, growth in net borrowing from affiliates is weaker for banks with more illiquid assets and fewer core deposits.” http://dornsife.usc.edu/assets/sites/744/docs/Goldberg_Correa_Rice.pdf

BASIS POINTS

-The Bank of Korea is back in the local foreign-exchange market, checking the won’s gains after staying fairly quiet for several months, traders in Seoul say. http://on.wsj.com/1gc2ynJ

-Russia’s finance ministry will resume buying foreign currencies for its rainy-day reserve fund on the open market, but it will make the purchase more flexible, the Finance Ministry said Thursday. http://on.wsj.com/1i5op0P

-”If you wanted to work at the Bank of England at the turn of the last century, you would have to answer some tough maths questions before you would be offered a job.” http://www.bbc.com/news/magazine-26934717

- Governments in developed economies raised income taxes for the third straight year in 2013 in a drive to cut their budget deficits, while real incomes declined in a number of rich countries, the Organization for Economic Cooperation and Development said Friday. http://on.wsj.com/1kcatTl

- Hungary’s consumer price growth remained slow in March due to government-mandated cuts in household energy and other utility prices, giving the Hungarian central bank room to continue to cut its policy rate in April. Dow Jones Newswires.

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